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A Rome Redeux


Babus Maximus!


"Five thousand of my bears are out there in the freezing mud. Three thousand of them are bloodied and cleaved. Two thousand will never leave this place. I will not believe they fought and died for nothing!"

--Boomus Maximus, Gladiator

Alright, Minyans, this is where the wagon wheel meets the sand. The ursine uglies have had ample time to dig the dagger deeper but the intense battle continues to rage on. While we (humbly) dusted off the fur earlier, concerns remain for Boo's crew. There are a lot of compelling charts out there, the momentum is to the upside (until proven otherwise) and there are structural underpinnings. What's a Minyan to do?

The first question you've gotta ask yourself is: do you feel lucky? No..that's not right. The first question you must address is one of time horizon. Are you trading for the day, for a catalyst or for a thesis? More importantly, does your risk profile mimic the length and style of your approach? It serves no purpose to be right on the direction if you're not around to see the fruits of our labor.

I tend to have all three types of trades on and do my best to adequately communicate a view. For instance, I've got day trades on (QQQ), thesis positions tucked away (Fannie Mae (FNM:NYSE)), and catalyst driven ideas (Cisco (CSCO:NASD)). Together, they form my book and an aggregate risk profile with which to trade. During a session if I "see" or "hear" something, I will augment my shorter term vehicles to reflect those inputs.

I share this as we're about to embark on the sleepless adventure known as earning's season. I've been talking to my cronies--not carnies, cronies--and we've been juxtaposing expectations, field position and other relevant metrics. On the one hoof, we have jiggy looking charts and more liquidity than The Water Boy. On the other paw, we have....well, reality. I am trying to synthesize all of this information and filter out any potential edges.

Net/net? My thesis and catalyst driven ideas are defined risk (options) and will remain on my sheets overnight. The lion's share of my meaty directional risk--when it's on--is being initiated (and removed) intraday. It's a balance that keeps me "set up" but not stretched out. It's also why I sometimes struggle with the costumes as my exposure varies as a function of time and price.

As for the rest of the day, the "can't get 'em down" herd and "can't get it up" crew are diggin' in for the close. Yesterday, a flurry of seven figure prints (buyers) bum rushed the close and sparked the squeeze. If it happens again, I've got my stop levels (set above) and, if not, I'll likely pick a bit into the close anyway. We've got Yahoo! (YHOO:NASD) tonight and as I don't have a relative edge, I don't want to toin coss.

Fare ye well into the close.
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